Wondered about avoiding probate? One of the easiest ways to avoid probate (which is a court proceeding that takes six months to a year, and must happen in order to transfer assets to loved ones if a person dies owning assets solely in their name) is to have beneficiary designations. For instance, when you purchase a life insurance policy, you list a beneficiary on the policy who inherits the money after you die. Likewise, you can list “payable on death” (also commonly referred to as “POD”) beneficiaries for bank accounts.
When you set up a bank account at the bank, they normally do not ask you whether you would like to make the account “POD” to anyone. You must ask the bank to do that. It is usually a matter of filling out one form and you must have the person’s date of birth and social security number to give to the bank. With most banks, you will know that the bank account is “POD” because on your monthly bank statement, it will show the POD beneficiary’s name after yours with the “POD” designation before or after that person’s name.
The downside to a POD designation is that you may not be able to indicate on the form who you want as a backup beneficiary (if the first person you designate dies before you). You should check with your bank about what they will allow you to designate.